Shipowners make up one tenth of the ranks on Norwegian magazine Kapital top 400 over richest people in Norway. Analyst is not impressed by the standard.
There is John Fredriksen – and 39 others.
The Norwegian-borne Cypriot shipping tycoon tops Kapital’s list of 400 richest people in Norway. But he is accompanied by a string of other shipping actors. Combined, the list totals 40 billionaires – in Norwegian kroner – who can call themselves shipowners.
According to the magazine, these persons represent a combined net worth of a little over USD 25bn, with their total estimated holdings having gained USD 3.6bn throughout 2022.
”After many weak years, shipping has proven to be a good place to earn your money and generate assets, at least to some,” states Kapital, adding, however, that few industries are ”more cyclical”.
High prices on ships increases net worth
Soaring ship prices form a particularly weighty factor behind these growing fortunes.
Kapital refers to ship broker Clarkson’s secondhand ship index, which noted a doubling of prices from 2020 to 2021, while prices on biggest vessels tripled.
”That carriers are ”worth” more today, is a reflection of a clear increase of underlying assets regarding the fleet, they command,” says shipping analyst Petter Haugen from investment banker ABG Sundal Collier to the media.
Shipping is a shitty business where capacity expansions, meaning the ordering og new ships, can be done by anyone without any insights whatsoever into the actual deployment of the ships
Petter Haugen, analyst, ABG Sundal Collier
However, Haugen is far from impressed with rich people calling themselves shipowners.
He points to low entries for newcomers in the business, and that competition from speculators can be tougher on more established players compared to other businesses.
”Shipping is a shitty business where capacity expansions, meaning the ordering og new ships, can be done by anyone without any insights whatsoever into the actual deployment of the ships,” says Haugen.
Haugen outlines a possible scenario within dry bulk market, where one contacts a shipyard, places an order for a ship and then calls up an operator and secures running earnings from the spot market. Alternatively, the ship can be chartered at a fixed rate.
”Either way, funding is all you need to call yourself a shipowner,” says Haugen.
Shipowners spread investments
The cyclical nature of shipping also prompts many Norwegian shipowners to spread investment portfolios.
John Fredriksen, for instance, has invested in salmon farms and real estate. The latter is, according to Kapital, a favorite among Norwegian shipping tycoons.
However, the magazine stresses that ”shipowners have seen worse results in real estate than other investors. You don’t become an real estate expert overnight.”
If Norwegian tycoons stick to shipping, good times may lie ahead. Roughly half of Norwegian fleet, the world’s fourth largest, transport goods and people while the other half works in offshore extraction of oil and gas.
Gas, having otherwise shown a lag in comparison to other segments, expects several year’s upswing with earnings having increased significantly since the Russian invasion of Ukraine, the article reads.
